FinTech and Financial Inclusion in Developing Countries: The Moderating Role of Regulatory Quality (Journal of Administrative and Economic Sciences)

Summary

• The empirical study examines the impact of FinTech adoption on financial inclusion using an unbalanced panel dataset of 12 developing countries across the 2014, 2017, 2021, and 2024 Global Findex survey waves.p.1
• FinTech adoption demonstrates a positive and statistically significant effect on financial inclusion across baseline estimations, recording a Fixed Effects coefficient of 0.7290 (p < 0.01).p.11
• Financial inclusion account ownership averages 0.588 across the dataset, ranging from 0.141 in Egypt (2014) to 0.890 in India (2024).p.9
• When controlling for traditional financial depth via Domestic Credit to the private sector, the interaction term loses statistical significance (β = -0.1011), while the main FinTech coefficient remains positive and significant (β = 0.8176, p < 0.01).p.11

Key insights

1. FinTech adoption acts as a key driver of formal financial access across developing economies.p.12
2. Macro-level variables such as GDP per capita, internet penetration, and mobile subscriptions do not exhibit statistically significant direct effects when controlling for country-specific heterogeneity and FinTech adoption.p.11
3. Regulatory quality moderates the effectiveness of FinTech adoption rather than serving purely as an independent direct determinant of financial inclusion.p.1
4. General internet penetration requires specialized financial infrastructure and digital literacy to effectively translate into formal transactional account ownership.p.13
5. The compensatory role of FinTech in weaker institutional settings is highly conditional upon the underlying depth and development of the traditional banking sector.p.13
6. India displays exceptionally high financial inclusion relative to its baseline FinTech adoption rate due to targeted national digital footprint interventions.p.9